Turning good intentions into greater impact: Why financial sustainability should be a priority for philanthropy in Media, Arts, and Culture

Philanthropy has long been involved in supporting the Media, Arts, and Cultural sectors but the importance of this role has increased significantly in recent times due to economic pressures, dwindling audience/advertising revenues and cuts to government funding. While philanthropic investments may be necessary in the short term to help these organisations stay afloat, it is crucial we consider the long-term implications of such a dependence. This article delves into the importance of steering philanthropic investments towards creating greater financial self-sustainability for media, arts and cultural institutions, reducing their reliance on external funds and promoting a healthier ecosystem and in turn a greater societal impact.

A recent report by Media Impact Funders, The Lenfest Institute, and NORC at the University of Chicago, highlights the significant growth of philanthropy in journalism. The figure 1 chart below (which is based on a total of 129 funders and 431 news organisations that responded) shows that the past five years, more than half of national, local and major funders surveyed had increased their support for journalism, with a third of them funding journalism for the first time during this period. Over 80% of the for-profit news organisations that responded to the survey reported receiving direct philanthropic support or engaging in training and leadership initiatives financed by philanthropic means over the past five years. Among for-profit entities benefitting from philanthropic backing, 52% said they received support from the Google News Initiative, while 36% obtained funding from Meta (which discontinued its journalism project and funding in 2022). Perhaps the report’s most striking finding though, is that barely half of the funders surveyed (53%) said that they aimed to help media grantees to raise their own funds or develop some form of financial sustainability.

Media: Independence and Credibility

In the realm of media, financial sustainability is of paramount importance. Audiences rely on unbiased, accurate, and impartial news reporting but when media organisations are heavily dependent on philanthropic funds, questions can arise about editorial independence and the ability to pursue long-term business and reporting objectives.

A pertinent example of the importance of supporting independent media is the case of the US-based ‘Press Forward’ Initiative. In September 2023, a coalition of 22 donors unveiled a national campaign aimed at bolstering local news and information to foster stronger communities and democracy. Over the next five years, this initiative will inject more than $500 million into the local news ecosystem, with the objective of repositioning local journalism as a unifying force for community cohesion and rectifying long-standing disparities in news coverage and practice. This massive investment in local media is undoubtedly ‘good news’ for the immediate survival of an industry in crisis. Yet, as the Lenfest study shows there are growing questions around the potential influence of donors on editorial content. In fact, "More funders are financing journalism in areas where they also do policy work (57% vs. 52% eight years ago), and four in 10 outlets take money to do specific reporting suggested by a funder, though that percentage has dropped significantly from 59% eight years ago. To preserve the integrity of journalism, the Media funders should be laser-focused on helping news organisations gain financial independence and thus to press forward with philanthropy without prioritising financial sustainability would be a major mistake.

Aiming to address this issue of media viability, The News Sustainability Project is a multi-year programme led by FT Strategies and the Google News Initiative (GNI) in partnership with INMA and other industry associations. The initiative aims to research and promote sustainability for news publishers around the globe. For more than two years, FT Strategies has collaborated with GNI to establish an advisory board, gather data from 450 publishers worldwide, build a sustainability diagnostic tool, and create customised recommendations for publishers to drive sustainable growth.

Arts and Culture: Thriving Beyond Funding

In the Arts and Cultural sectors, philanthropy has been a lifeline for museums, theatres, and artistic endeavours. However, an over-reliance on philanthropic funds leaves these institutions vulnerable, with the sudden cessation of funding resulting in the death of vital cultural establishments (e.g. the recent closure of the Brighton Centre for Contemporary Arts).

In the US, the example of the Metropolitan Museum of Art in New York City highlights the consequences of such dependence. In the wake of the financial crisis, the museum faced a substantial reduction in endowment earnings, resulting in layoffs and budget cuts. Therefore, ensuring the continued flourishing of these institutions, financial self-sustainability is imperative.

Last year, FT Strategies began partnering with the National Theatre to assist with the launch of their online streaming platform, "National Theatre at Home.”. Our consultants provided support in developing a sustainable subscription model and strategies to reduce subscriber churn. The work resulted in the development of an implementation roadmap, which was used to launch 10 recommended initiatives, including a new online “save me” journey that has reduced cancellations by 10% and an increase in conversion rates from existing subscribers from monthly to annual by around 4%. Overall, this work helped the National Theatre achieve a 29% growth in the total number of subscribers to its video on demand platform in just one year.

The challenge of protecting and strengthening societal institutions is not unique to philanthropists in the Media, Arts and Cultural sectors however and I believe these donors can draw a vital lesson from the field of International Aid and Development. Historically, donors in this sector favoured direct investments in countries and regions, often resulting in unforeseen issues like corruption and dependency. Over time, there was a shift towards the concept of "capacity building" for economic development and self-sufficiency. This shift underscores the importance of not merely providing resources but enabling organisations to stand on their own feet.

Applying this principle to the Media, Arts, and Cultural sectors, philanthropy should be more than a source of temporary sustenance; it should aim to build the capacity for financial self-sustainability. This transformation can be achieved through the following methods:

1. Investing in Skills and Infrastructure: Philanthropic organisations can support training programs, infrastructure development, and technology upgrades, ensuring that cultural institutions and media outlets can generate their own income through expanded services and outreach.
2. Diversification of Revenue Streams: Encouraging organisations to explore diverse revenue streams, such as membership programs, merchandise sales, or educational initiatives, that can reduce their dependence on external funds.
3. Strategic Planning and Financial Management: Philanthropic investments can be directed towards enhancing the financial management and strategic planning capabilities of these organisations, equipping them to make informed decisions for their long-term stability.

FT Strategies recognises the critical need for financial self-sustainability in the Media, Arts, and Culture sectors. We offer a unique set of services to philanthropic organisations looking to make a lasting impact in these sectors.

• Our Delivery Experience: FT Strategies has a proven track record in successfully delivering large and complex programs to support organisations in these sectors. We have worked with over 600 media, arts and cultural institutions in 66 unique countries around the world delivering complex programmes and projects to support their sustainable growth.
• Our Industry Expertise: We bring to the table a team of experts well-versed in the intricacies of the media, arts, and culture sectors. Our extensive network of FT practitioners also allows us to offer invaluable insights and connections from across the globe.
• Our Ability to Measure Impact: We understand the importance of quantifying the impact of philanthropic investments. Our robust measurement frameworks enable us to track and demonstrate the effectiveness of our work with partners.
• Our Ability to Amplify Partner Work: The Financial Times brand and platforms provide a unique opportunity to amplify the work of our partners. We can promote their initiatives to a large and influential audience, furthering their reach and impact.

The Media, Arts, and Cultural sectors play a vital role in shaping our society and preserving our collective heritage. Philanthropy's involvement has been instrumental in sustaining these institutions, but it is time to shift our focus towards financial self-sustainability. This not only ensures their long-term survival but also allows philanthropic organisations to support a broader array of initiatives.

By drawing lessons from International Aid and Development philanthropy and adopting the principles of capacity building, we can create a future where these sectors stand on their own financial footing, delivering exceptional value to society without undue reliance on external support. FT Strategies stands ready to help philanthropic organisations to maximise, measure and promote the sustainable impact of their investments to strengthen the Media, Arts, and Culture sectors for generations to come.

If you would like to learn more about how FT Strategies can help you make a sustainable impact in the Media, Arts or Culture sectors, please do not hesitate to contact us here.

George is a Principal at FT Strategies, he joins us from Monitor Deloitte with over a decade of experience in strategy consulting and in-house advisory. Leading strategy development, service design and digital transformation teams, he has advised senior leadership from across both the public and private sectors.